The reform of the coal industry should be discussed by all local residents of coal regions

13 July 20171122

Last week, I studied German experience in the #coal_industry_reform and the transition to #alternative_energy_sources. A few notes on their experience (unfortunately, I spent only 3 days there, so, the analysis is still initial).

Part 1. Coal. General Approaches.

1. Our interlocutors noted that "Germany and the Germans decided to close coal mines" (the last one should close in 2018). It is very important to understand that the decision was made by society as a whole and not by a few politicians or ministers. The nature of the solution is dual: first of all, economic, because it is cheaper to buy imported coal, and then ideological, because other ways to generate energy are better. The Germans can count, so they include in the cost of extraction not only the direct cost of the coal itself, but also all the negative consequences for the region and the country: air pollution, injuries, occupational diseases, climatic impact and natural balance upset in the region of extraction. A similar decision has been made regarding the nuclear energy sector. The extraction of lignite continues and there is no final decision on its termination.

2. The decision on coal was taken a long time ago, but during the last decades it has been activated. For reference: In the 1960s, the coal industry employed 700,000 workers, now 20,000. Within the whole country, this is not an extremely large social problem.

3. The reform of the coal industry is considered as follows: "which new sectors of the economy need investments to create new opportunities in the producing areas?" It is not just how to help miners, but how to create new economic growth points for the region in question. For example, 20 universities have been established in Ruhr, Dusseldorf, since 1960. Currently, 40% of EU support package is spent on "innovations and research". No matter how hard I tried to find information about any unique social packages for miners, the only thing I heard was an opportunity of early retirement. There were certain retraining programs, but since all the mines were private, the market regulated most of the issues of social adaptation. The general principle is very different from what I hear in Ukraine: the coal industry is not profitable (if all negative consequences are included in the cost for the society), and therefore it makes no sense to invest a single penny in it.

4. The role of trade unions was not rated high by our interlocutors. We were told that they only instigated the miners and did not look for a way out of the situation. Interestingly, those trade unions have formed part of larger ones, which consist of representatives of other industries, such as chemical and machine-building. The miners were considered to have sufficient security during their period of employment, and therefore, they say, there should not be any particular approaches to them. It was observed and looked after by other strata of society.

5. The biggest problem of the reform, or, in other words, the closure of mines, falls on the shoulders of the regional authorities. Our delegation included three mayors of Ukrainian cities from the mining regions and they will be solving most problems. On the one hand, there are miners, and on the other hand, there are all other residents who now either depend on miners or look for better economic opportunities. Both the former and the latter feel adverse the effects of coal production, from bad health to peculiar landscapes. But today, also as a result of the inconsistency of the central authorities, people do not believe in the good chances for other opportunities. In Germany, in recent years, more jobs have been created in the alternative energy sector than in the coal sector. But this is already the second part ...

At times, it seemed to me that the nature of our questions "what to do with miners?" was somewhat unclear to our interlocutors. They could not understand how the state could pay subsidies to unprofitable mines, if the society as a whole was against such use of funds.

As far as I am concerned, I have learnt the following lesson:
- The reform of the coal industry should be discussed by all local residents of coal regions, and should be supported by them, accordingly. Opinions of both miners and other residents should be taken into account.
- The essence of the reform is to find alternative industries and opportunities, rather than optimize the coal industry.
- This reform should be gradual, but with an obvious single tendency and no deviation from the general line – the reduction of extraction and replacement with other energy sources.